Suze Orman's 5 Best Pieces of Financial Advice

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Wondering how to make smart financial decisions? Here's a look at Suze "The Money Lady" Orman's best recommendations.

Suze Orman, also known as "The Money Lady," is a popular financial guru recognized for giving personal finance advice and helping people change their money habits. If you're looking to improve your financial situation, you can't go wrong looking for the best tips that she has given over the years.

Transfer your credit card balance to a 0% APR card

Having credit card debt is a common problem in the United States. According to Experian, the average credit card balance was $5,315 in the third fiscal quarter of 2020. As credit card debt piles up, the interest that accumulates can be astounding. Orman recommends transferring existing credit card debt to a 0% APR introductory credit card.

Transferring your balance can be a great move if you have significant debt on cards with high interest rates. In most cases, you will pay a balance transfer fee when transferring your debt to a new credit card. But many of these cards typically offer a 15- to 18-month 0% APR introductory rate on balance transfers. That means you'll take advantage of months of no additional interest charges while you pay down your credit card debt.

An example of how a 0% balance transfer credit card can help:

Let's say you transfer $5,000 in credit card debt. If you choose a card with a transfer fee of 3%, you'll pay $150 in fees. If the card offers 0% APR for 18 months, you could pay the total balance of $5,150 in full by paying around $286.11 monthly for 18 months. That could be much more affordable than carrying that debt on a high-interest card and continuing to pay interest fees.

Check to see how much total debt you have on your high interest cards, and use a credit card interest calculator to see if this makes sense. If you can comfortably afford to pay the debt off within the 0% APR introductory period, you may save a lot of money on interest costs.

Check your credit report

Your credit score and credit situation is a big deal. If you have a poor credit score or have many negative marks on your credit report, you may struggle to get a mortgage or car loan, and it may even impact what jobs you can get.

Orman recommends checking your credit report regularly. While this free report won't show your credit score, it will give a good view of your overall credit situation, including:

  • Credit accounts that are currently open
  • How long your credit accounts have been open
  • Whether you've missed payments or made late payments
  • Your account balances
  • Recent credit inquiries

You can use your free annual credit report to see what areas you need to improve on. You may also find reporting errors or signs of fraud on your credit report. By checking your credit report and noticing any incorrect or questionable information, you can get those errors corrected.

Track your spending

If you don't keep track of your spending, it'll be challenging to see where your money is going. You may not even realize how much money is being wasted on unnecessary purchases.

Another piece of financial advice Orman recommends is to track your spending. Doing this will allow you to get a clearer picture of your finances. It can also show what spending adjustments you may need to make.

Be sure to check your bank statements and credit card statements to get a complete picture of your spending habits. Use the information that you find to make small changes that will improve your financial situation over time.

Create an emergency fund

Having an established emergency fund can help you get through stressful financial situations. You never know when an unexpected expense may come up. If you have no extra money set aside, you may incur more credit card debt.

Suze Orman recommends starting an emergency fund, even if you have to start small. For a long-term goal, you should plan to have eight months of living expense costs set aside in your emergency fund. This way, if a significant, costly life-changing event happens, you have the money that you need to get by without added financial stress.

You can reach your emergency fund goals sooner by automating your savings. Even setting aside as little as $50 or $100 per month will add up over time. By automating your savings, you don't have to think about it.

We acknowledge that it may feel impossible to start an emergency fund when you're struggling financially. Here are some simple tips to ensure you have an emergency fund within a year. And for help figuring out how much you may want to save, check out this emergency fund calculator.

Diversify your investments

Investing can help set you up for a better future, but it can come with big financial risks. To help minimize that risk, Orman recommends diversifying your investments.

Investing in exchange-traded funds (ETFs) is an easy way to diversify. Buying ETFs allows you to invest in multiple stocks or bonds at once. By having a broad mix of investments in your portfolio, you can feel more confident about your financial future. If you're looking to diversify, take a look at the best ETF brokers.

Give one or more of these pieces of expert advice a try, because working to make smarter money moves can improve your life and your financial situation. If you want more tips on money matters, check out our personal finance resources.

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